New WH Smith chief executive pledges to carry on with predecessor's strategy
as profits rise.

The new chief executive of WH Smith has pledged to press ahead with the strategy laid out by his predecessor Kate Swann after the stationery retailer reported another rise in pre-tax profits despite a fall in high street sales.

Stephen Clarke, who replaced Ms Swann in July and was previously head of WH Smith’s high street business, unveiled a 6pc rise in pre-tax profits to £108m for the year to August 31, better than the City expected, with like-for-like sales down 5pc.

Under Ms Swann, who ran the company for a decade, and Mr Clarke, WH Smith has focused on cutting costs and generating cash from its high street stores while sales have been falling.

At the same time, it has been growing its travel business with stores in airports, stations and hospitals, and returning cash to shareholders through share buy-backs and a steadily increasing dividend.

In the last year, WH Smith cut £18m of costs thanks to the introduction of energy efficient tills in it stores that require less maintenance, and the installation of voice picking in its distribution centres.

Mr Clarke said that another £22m of cost savings have been identified over the next three years, and also announced that he will launch another £50m share buyback scheme.

The extra cost savings, the share buyback, and a 15pc hike in the final dividend drove shares in WH Smith up by more than 5pc in early trading.

Mr Clarke said that WH Smith was enjoying a “strong performance across the group”.

Like-for-like sales in the high street fell by 6pc, while travel sales fell 4pc. WH Smith said sales had been dragged down by the popularity of the Hunger Games and Fifty Shades trilogy during the previous period.

WH Smith operates 615 high streets stores. The company operates 82 Post Office branches within its stores and has agreed to extend this agreement for an extra five years as well as add a further 16 branches.

Mr Clarke also revealed that the company has stepped up expansion of its international travel business by signing up for 20 new shops, including six in Australia, two in Russia, and one in India.

The company now has 141 international stores, including 30 kiosks in China.

Mr Clarke stated: “We continue to deliver on our strategy with a strong performance and good profit growth in both businesses.

“The group remains highly cash generative enabling us to invest in our businesses and in new opportunities, whilst returning cash to shareholders, including a further £50m share buyback announced today.

“Looking to the year ahead, we continue to plan cautiously in an uncertain environment, however we are a resilient business and are well positioned for continued growth in both the UK and internationally.”

Nick Bubb, independent retail analyst, said: “The message is that there is no need to change something that it is still delivering the goods, with the PBT outcome of £108m a tad ahead of expectations and cash generation still enough to finance another useful dividend increase and another £50m share buyback plan for the new year.”

In the annual results, WH Smith revealed that is has bought the Modelzone brand out of administration

The model retailer collapsed into administration earlier this year. WH Smith plans to use the brand to sell gifts within its stores. The company also owns the Past Times and Gadgetshop brands.